A Brief History of the Federal False Claims Act

The False Claims Act, which is also known as Lincoln’s Law thanks to the president who signed it 150 years ago, is crucial legislation that protects the government from fraud and waste. But in its long history, it hasn’t always been the powerful law that it is today. When Abraham Lincoln signed the act into law during the Civil War, it was because of the amount of corruption he noticed during the conflict. Profiteers saw and seized the opportunity to defraud the government in wartime, and they did so often enough that Lincoln and Congress decided to set a new legal precedent by allowing plaintiffs to sue on the government’s behalf. For the first time in American legal history, the plaintiff did not have to be injured directly in order to bring a suit. The second new thing that the False Claims Act permitted was what’s known as a qui tam provision, in which the person who brings the suit (known as the relator or whistleblower) receives a portion of the monetary award; initially, it was 50 percent of the total amount recovered. The tradition behind qui tam predates the False Claims Act, but it hadn’t been a part of any specific law before Lincoln’s. Both the monetary compensation and a person’s ability to sue on the government’s behalf were intended to make it easier for ordinary citizens to speak up if they saw other people or companies cheating the government.

Although the law worked well, for a period of time from the early ‘40s until the mid ‘80s, it was rendered almost useless due to alterations made by Francis Biddle, the attorney general, in 1943. Biddle’s changes to the False Claims Act made it both more difficult for whistleblowers to file a suit and less lucrative for them if the suit won. Then in 1986, President Ronald Reagan repealed many of these changes and reinvigorated the act with amendments sponsored by Senator Charles Grassley, an Iowa Republican, and Representative Howard Berman, a California Democrat. Ever since, whistleblowers have been eligible for awards of between 15 and 30 percent of the total amount of money recovered. President Barack Obama has also signed amendments supporting the law, and it has been all to the good of the government, which has been able to recover billions of dollars per year from companies in industries such as healthcare and defense, which unfortunately see a greater than average share of fraud cases each year. As over 9,200 qui tam cases have been brought on the government’s behalf since 1986, it’s clear that Lincoln’s Law continues to have a tremendous impact on the finances of the government as well as on justice.